As a past President of OPEC, do you think the cutting of oil production is the lasting solution to the fall in oil prices? If so why, but if not, what further step should be taken?

When oil production is cut, it could be for a number of reasons. In the immediate situation, we have oil supply hovering between 15 and 17 million barrels in excess of world demand. This is because industries, airline services, and the general world economy have been shut down as a result of the COVID-19 pandemic. Even without a policy, oil prices had to be cut down. Realistically speaking, the cut in production was necessary, indeed almost inevitable.

A long-term solution to this should be a regional focus. Each country must look within its immediate region to see how it can satisfy those immediate demands so that at least oil can go to places that are shorter in distance and much more dependable as markets.

With oil prices falling to unprecedented lows globally, will the price ever get back to the initial $57 benchmark as stated in Nigeria’s 2020 budget?

It doesn’t matter what happens, oil is not likely to get to $57 a barrel this year. We are likely going to see a rebound in terms of prices over the first or second quarter of next year. However, it is even doubtful whether we will get to the $57 benchmark early next year, for many reasons.

For example, a lot of countries with huge financial resources like China and America built huge initial stockpiles of oil in the initial months of COVID-19 when prices were low.  So, even when the pandemic is over, there is going to be a lot of pressure on prices.

With the triple whammy of low demand, high supply, and minimum storage of crude, what are the underlying effects of these on local producers?

We are suffering in terms of storage and because of that, a lot of our oil still lie onboard vessels that haven’t been able to be discharged. Storage capacity all over the world is full, but Nigeria has been particularly badly hit because we have very limited storage inland.

We need to address storage and create storage obligations among oil producers. We need to address the issue of diversification in terms of our product lines into petrochemicals and gas, so that we get a lot more out of oil. We also need to massively grow our refining capacity so that there is a consumer pattern that is even locally based.

It costs Saudi Arabia $2.8 to make a barrel of oil – the lowest production cost in the world. With the gloomy oil price of Nigeria’s bonny light, will it be a case of reducing production cost for Nigeria?

The first thing to do if you’re not getting a good return on your investment, in terms of cost versus pricing, is to shut down such products and look for fields that have better margins, to enable you to compete.

Above all, when all this is over, we will need to continue to address the cost element, I think that was one of the high points of some of the policies that we made when I was in Government. Under the leadership of the President, we began to focus very heavily on the cost of production and set benchmarks.

We achieved about $15pb cost of production in some fields and we were aiming over the next 2 to 3 years to pull the cost of production for most fields down to about $10-$11pb and thereafter go downwards from there.

There is a need to create rewards for those producing at very low cost; right now there is none in place. If there are incentives for producers who meet certain benchmarks on cost reduction, everyone will follow suit. Simultaneously, there should also be a penalty for producers who produce at a very high cost.

Many Nigerians feel that the biggest problem faced by the Federal Government is the inability to refine crude in Nigeria. Dangote refinery has been at the forefront of this for a number of years. What benefits would that provide for the FG and every stakeholder in the oil value chain, once it begins operation?

I won’t focus on just Dangote refinery, although that is probably the most positive one we have in the country right now; I will focus on all the refineries. If all the refineries in this country, including Dangote refinery, were to come on stream, some of the issues we have dealt with in the questions asked so far relating to storage, consumption, and pricing, will reduce substantially because we will not be selling crude oil as crude oil. Rather, we will be selling refined petroleum products so there will be value-added.

We will stop importing refined products. We will also be able to rejuvenate the downstream sector of the oil industry, which is right now almost abandoned. Nigeria will be the real energy King of Africa in terms of sending refined petroleum products to African nations. This will lead to job creation, improvement in technology; it will challenge our private sector investors.

Do you think the energy market will ever return to the old mode of operations, as many African petroleum-producing nations have been forced to review their budgets downward due to COVID-19? 

Hopefully, I pray the COVID-19 pandemic does not last long and that it does not irreversibly affect the oil market. Although we cannot tell when the current COVID-19 will end, the global scientific projection is that it will last till about the 1^st quarter of next year. What this does for us, if we use the time well, is that it will help us intensely refocus our attention to other sectors apart from the petroleum sector, and invest massively in mechanized agriculture, services, tourism, etc.

The oil and gas sector has its disadvantages too. It is creating a lot of pollution, shutting down a lot of farms and sometimes distracting young people from careers, because everyone wants a quick oil return. Agriculture should be one of the focal points of this country because we have massive landmass.

President Buhari has intensely refocused Government investment attention on agriculture and infrastructure. We need to get people back to farms. We need to build modern infrastructure. The government will need to step back from the model of controlling the investment opportunities in the oil sector and allow the private sector to take the lead on harnessing these opportunities. The government can then sit back to enjoy its royalties and taxes.

You want to serve as a visiting professor in institutions across the world. What do you hope to take away and accomplish from the experience? 

My drive is simply to share experiences that are useful to those who are coming up the block. I modestly hope to share personal experiences, as I’m privileged to have worked with the private sector for over 25 years and the public sector for about four years. I think one owes it to society at large to share one’s knowledge. This is one of the factors that propel my writing. I was writing before I went to the government and when I was in government, I continued.

I try to look at everything I do and how to document experiences. It helps the next person that will take your desk to do better than you by virtue of the information at their fingertips.

What private ventures are you into now?

One passion that I have is intellectual, so going into institutions to share thoughts and learn along with people, as talked about already, is part of my ventures.

Another is Afric Energy, a venture that we are floating and hoping to grow. The whole idea is to look at Africa across the board and decide what kind of consultancy models we can bring to address some of the immediate problems that we see across the African oil sector.

Having served as both the President of OPEC and three-time President of APPO, I aim to work with some of my former African petroleum sector Ministers who are still there to help them solidify the plans that they have.

As a lawyer in the Petroleum Industry, you have stated in the past that Nigeria needs to go back to the drawing board to find the right approach to the sector. What approaches, in your opinion, can we take?

One approach is regulatory. We haven’t been able to pass some key bills; for example, the “Petroleum Industry Bill.” The time has come to focus attention on this because the absence of an adequate regulatory environment creates uncertainties among investors. I am hoping that during this second tenure of President Buhari, the attention will be on passing the PIB in whatever form that they believe is best for the country. A lot of work has been done in the last 2 Assemblies, and it is now time to bring this to a conclusion.

The second approach is to set policies that create a competitive environment in the energy sector. By this, I mean that we need to diversify investment into petrochemicals, refineries, and creating necessary storage infrastructure.

The third and final is to begin our plan for the heydays of oil. It is clear that oil production as is seen today will not be there forever. The challenges posed by new technology, environmental regulatory controls, global consumption behavioral patterns, and coming new world economic order makes it imperative for us to begin to investigate an economic model that is not completely dependent on oil. This is the drawing board that we all have to focus on.